Global aluminium price hike triggers Alcoa to restart Alumar smelter in Brazil

The leading aluminium producer Alcoa Corporation has tooled up on a project to restart an idled aluminium smelter in Brazil following the hike in aluminium prices to a 13-year high and Chinese output reduction.

On 20th September 2021, the Pittsburgh headquartered aluminium producer and its partner South32 Ltd. will expend around $75 million, including approx. $10 million in capital expenditures to restart Alumar in north-eastern Brazil said in a statement. The fully retrenched aluminium smelter since 2015 is set to deliver its first molten metal in Q2 2022.

In May, the decision was pronounced as a possibility due to the constant price rally of aluminium and also the gradual rise in demand for aluminium from cars to cans stirred the metal price nearly double over the last 18 months.

The price of electricity plays a vital role as in Brazil, power accounts for more than 70% of the cost of producing aluminium. The prolonged drought in Brazil which restricts the supply of hydroelectricity has been taken into consideration for Alumar’s resumption to operation and the proposal laid that by 2024, it will be powered by renewable energy.

The aluminium smelter is set to attain 268,000 tonnes annual capacity in Q4 2022 that indicates about 80% of Alcoa’s 2.99 million tonnes of global smelting capacity will be operational.

The restart of Alumar will deliver a positive signal to the Brazilian manufacturing sector. The country with huge bauxite reserves and once with cheap and abundant hydroelectricity rose to the sixth-largest aluminium producer in the world, which has de-graded to 15th.

John Slaven, COO, Alcoa said: “Our restart decision is based on an analysis that shows the smelter can be competitive throughout all cycles, leveraging the co-located refinery, a strong workforce, and competitive, renewable power arrangements.”